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Behind Consumer Agency Idea, a Tireless Advocate

WASHINGTON — Ask Elizabeth Warren, scourge of Wall Street bankers, how they treat consumers, and she will shake her head with indignation. She will talk about morality, about fairness, about what she calls their “let them eat cake” attitude toward taxpayers. If she is riled enough, she might even spit out the Warren version of an expletive.

“Dang gummit, somebody has got to stand up on behalf of middle-class families!” she exclaimed in a recent interview in her office here.

Among all the dramatis personae of post-financial crisis Washington, there is no one remotely like Ms. Warren, 60, who has divided the town between those who admire her and those who roll their eyes at her.

She is an Oklahoma native, a janitor’s daughter, a bankruptcy expert at Harvard Law School and a former Sunday School teacher who cites John Wesley — the co-founder of Methodism and a public health crusader — as an inspiration. She brims with cheer, yet she is such a fearsome interrogator that Bruce Mann, her husband, describes her as a grandmother who can make grown men cry. Back at Harvard, Ms. Warren’s teaching style is “Socratic with a machine gun,” as one former student put it. In Washington, she grills bankers and Treasury officials just as relentlessly.

Ms. Warren has two roles here: officially, as head of Congressional oversight for the Troubled Asset Relief Program, and unofficially, as chief conceiver of and booster for a new consumer financial protection agency. Fusing those projects and her academic work, she has become the most prominent consumer advocate in years.

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Elizabeth Warren during an event at the White House in October where President Obama called for new consumer protections and urged Congress to pass regulatory reform legislation.Credit
Stephen Crowley/The New York Times

In a blitz of television appearances, she offers a story of how 30 years of deregulation has rewarded the financial industry but led to abusive practices and collapses that have hurt ordinary Americans — the same taxpayers who are paying for bank bailouts.

Ms. Warren’s climactic hour begins now: three years after she hatched the idea for the agency, the White House has backed it, the House of Representatives has approved it and it is a top Democratic priority in the Senate.

Many fans, including Representative Barney Frank, Democrat of Massachusetts, hope Ms. Warren will run it. But even if the agency is approved, it might be far weaker than what she envisioned, thanks to fierce opposition from the financial industry.

Critics argue that such an agency, which would regulate mortgages, credit cards and nearly all other loans to consumers, would tighten credit in an already tight market, stifle innovation and hurt small businesses.

They have another objection as well: to Ms. Warren herself. As one administration official acknowledged, the prospect of her running the new agency may be an impediment to its creation because of her crusading style, her seemingly visceral loathing of financial services companies and her expansive way of interpreting assignments.

“ ‘Loose cannon’ would be an appropriate term to apply in her case,” said Dean Baker, co-director of the Center for Economic and Policy Research and a Warren supporter.

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Elizabeth Warren, head of oversight of the Troubled Asset Relief Program, has strongly advocated for middle-class families.Credit
Mary F. Calvert for The New York Times

The defining event of Elizabeth Warren’s life may have taken place before she was born, when a business partner ran off with the money her father had scraped together to start a car dealership. She arrived a few years later, in 1949, another mouth for a strapped family to feed. But she used that mouth to talk her way into a debate scholarship at George Washington University at age 16.

She became a speech therapist, then a lawyer — she hung a shingle and did wills and real estate closings — then a part-time law instructor, and finally a leading scholar of bankruptcy. Her research helped change the stereotype of bankrupt people as feckless deadbeats: many, she showed, are middle-class workers upended by divorce or illness.

While Ms. Warren was building her career, her father became a maintenance man and her three older brothers back in Oklahoma worked in construction, car repair and the oil fields. Among them, they have endured all manner of financial crisis, including foreclosure, according to Ms. Warren’s husband.

“I learned early on what debt means, how vulnerable it makes people, what the security of owning a home means,” Ms. Warren said, her eyes welling. Even today, said Ms. Warren’s daughter, Amelia Warren Tyagi, her mother is so frugal that she eats shriveled grapes out of the fruit bowl.

Six years ago, Ms. Warren was one of the few guests at a Harvard Law School faculty reception for Barack Obama, an alumnus then running for a United States Senate seat in Illinois. He greeted her with two words: “predatory lending,” signaling he knew her work. He began to talk about dicey mortgages and abusive credit products and their shattering effect on families, Ms. Warren recalled. Finally, she cut him off.

“You had me at ‘predatory lending,’ ” she said. A few years later, Mr. Obama was promoting her idea for a consumer agency on the presidential campaign trail.

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Elizabeth Warren with Richard H. Neiman, New York's superintendent of banks, last month. Credit
Mary F. Calvert for The New York Times

Meanwhile, in October 2008, Harry Reid, the Senate majority leader, called out of the blue and asked Ms. Warren to head Congressional oversight of the bank bailout. It was a vague job, sketched out in a hurry, but she interpreted her mandate aggressively. Instead of issuing standard monthly reports, she turned them into independent research projects, bulletins and videos asking pointed questions about Treasury’s treatment of the banks.

At the same time, banking lobbyists and other business-financed groups threw their weight against the consumer agency proposal — and they complained about Ms. Warren as well. (Wayne Abernathy, a lobbyist for the American Bankers Association, declined to comment for this article but recently asked if the TARP oversight panel had become “the new Warren commission.”)

“She comes at the world from the perspective that she knows what’s good for people,” said Douglas Baird, from University of Chicago Law School, who said he shared Ms. Warren’s concerns but not always her views. “She starts with a skepticism of markets and a skepticism of the ability of consumers to make sensible choices.”

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The TARP project also complicated Ms. Warren’s ties to the Obama administration. The president lights up when her consumer protection ideas are discussed, according to Diana Farrell, deputy director of the National Economic Council. Likewise, David Axelrod, a White House senior adviser, effused about Ms. Warren in an interview by phone, using the word “passionate” over and over.

Her relationship with Treasury is chillier. In private, she has worked closely with some officials there on regulatory reform. But in her oversight role, she pounds the agency, leading some to accuse her of showboating or breeding cynicism about a program functioning better than many expected.

“I’m a thorn in this administration’s side as much as in the last administration’s side,” she said.

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Elizabeth Warren, 3, in Norman, Okla. She became a speech therapist, then a lawyer and an expert in bankruptcy law.Credit
Warren Family

She will not comment on whether she might head the agency, for the same reason administration officials will not. “What we’re trying to do is build an institution that’s over and above any individual,” Ms. Farrell said.

Ms. Warren does say that if she and the administration lose on the agency’s passage, she’d like them to lose big — to force lawmakers, as she puts it, to leave “lots of blood and teeth” on the floor.

If that happens, Ms. Warren will still have her own platform, starting with her nearly constant stream of television appearances. Hosts and cameramen love her: she has the friendly face of a teacher, the pedigree of a top law professor, the moral force of a preacher and the plain-spoken twang of an Oklahoman.

“This is America’s middle class,” she recently said on “The Daily Show With Jon Stewart.” “We’ve hacked at it and pulled at it and chipped at it for 30 years now, and now there’s no more to do. We fix this problem going forward, or the game really is over.”

“When you say it like that and you look at me like that, I know your husband is backstage, I still want to make out with you,” Mr. Stewart responded.

If no agency or government post materializes, Ms. Warren says she will happily return to Harvard. Others expect her to do more, including Eliot Spitzer, the former New York governor who has come to know her through their shared interest in consumer advocacy.